New/Not New Legislation and Deductions/Exemptions Daniel Shackle General Counsel May 2018 1
Disclaimer This presentation and other Department of Local Government Finance materials are not a substitute for the law! This is not legal advice, just an informative presentation. The Indiana Code always governs. 2
Overview • Introduction • Enacted Legislation • HB 1104 – 2018 • Deductions – The Universe • Less Common Deductions • Questions 3
Introduction Daniel Shackle General Counsel Telephone: 317-233-9219 E-mail: dshackle@dlgf.in.gov Website: www.in.gov/dlgf “Contact Us”: www.in.gov/dlgf/2338.htm 4
2018 Legislation 5
2018 Legislation • HEA 1323 - 2018 • IC 6-6-15 - Heavy Equipment Rental Excise Tax (new section) • Effective January 1, 2019 • Heavy Rental Equipment Defined : • Personal property • Owned by a person or business • Not intended on being affixed to real property • Not for use on a public highway (IC 9-18.1) • Does not include: • Equipment rented for mining purposes or is eligible for a property tax abatement deduction under IC 6-1.1-12.1. 6
2018 Legislation • HEA 1323 – 2018 (cont’d) • Starting with the 2019 assessment date, heavy rental equipment subject to the excise tax is not subject to assessment and taxation. • Revenue from the tax to be deposited in heavy equipment rental excise tax account. • The county auditor will apportion the funds in the same manner that property taxes are apportioned and distributed based on location where the tax is sourced. 7
2018 Legislation • HEA 1141-2018 • Funding for Community Mental Health Centers (CMHC) • Effective January 1, 2019 • Changes funding formula in IC 12-29-2-2 • If the county’s 2017 general fund levy is greater than its 2018 general fund levy, after accounting for circuit breaker credits, the CMHC appropriation for 2019 will have no adjustment from the 2018 amount. • If the county’s 2018 general fund levy is greater than its 2017 general fund levy after accounting for circuit breaker credits, the CMHC appropriation for 2019 will have an adjustment equal to the growth in the amount from 2017 to 2018. • Marion County will have a three-year phase-in. 8
2018 Legislation • HEA 1141-2018 • CMHCs will receive funding based on their population compared to the county and must be certified by the division of mental health and addiction. • The Treasurer will pay the CMHCs directly at least twice a year (July and December). 9
2018 Legislation • HEA 1263-2018 • County Jail Tax Rate • See most recent DLGF memo • Maximum expenditure rate under IC 6-3.6-6-2 is not affected. • Always adopted by County Council • Local Income Tax Council County or County Council? • Always have DLGF perform its statutory review! • Local Income Tax Council County • The ordinance adopted by the County Council will always increase the overall expenditure rate by the amount of the adopted county jail tax rate. • Unless, the adopted county jail tax rate would put the overall expenditure rate above the maximum allowable total expenditure rate. 10
2018 Legislation • HEA 1263-2018 • County Council Only • Local ordinance should state 1) whether the rate is included in or outside of the current expenditure rate, and 2) how to reduce the other components of the expenditure rate. • If the ordinance is not clear, DLGF will assume that the county’s intent was increase the overall expenditure rate by the amount of the adopted county jail tax rate. • Recommend that LIT ordinances state the overall expenditure rate and rates for each component when adopting. 11
House Bill 1104 - 2018 12
HB 1104 - 2018 • DLGF Agency Bill • Dead Bill – THIS IS NOT CURRENT LAW!! • Contents to be aware of for 2019 – DLGF • County auditors submit property tax settlement and distribution information to the DLGF by July 31 (spring settlement) and January 31 (fall settlement). • Amends the definition of "owner" (for purposes of the property tax statutes) to delete the provision specifying that an owner of tangible property includes the holder of a tenancy for a term of years (e.g., lessees). • Political subdivisions must include in the Gateway Form 3 information concerning the percentage change between the current and proposed tax levies of each fund. 13
HB 1104 - 2018 • A person seeking a property tax exemption for property under IC 6-1.1-10- 16 may file an exemption application up to 30 days following the April 1 application deadline if the person pays a late filing fee. • County auditors must submit data on deductions applicable to the current tax year to the homestead property data base on or before March 15 of each year, in a manner prescribed by the DLGF. • Repeals the statute providing for a county board of tax adjustment. Deletes references throughout the IC to the county board of tax adjustment. Largely a technical correction, as no county boards of tax adjustment exist. • A political subdivision shall file the Form 4 with the DLGF under IC 6-1.1-17-5 not later than five business days after the budget is due. • The DLGF may adopt rules for procedures related to local government budgeting. Specifies that the adoption, amendment, or repeal of such a rule by the DLGF may not take effect before March 1 or after July 31 of a particular year. THIS IS NOT CURRENT LAW!! 14
HB 1104 - 2018 • For purposes of attributing the amount of a property tax deduction or exemption to a property in tax and billing systems: (1) a deduction or exemption that is specific to an improvement shall be applied only to the assessed value allocation pertaining to that improvement; and (2) to the extent that a deduction or exemption is not specific to an improvement; the deduction or exemption shall be applied in the order that will maximize the benefit of the deduction or exemption to the taxpayer. • For TIF districts and other allocation areas, the base assessed value for tax increment financing purposes includes the net residential assessed value within the allocation area, as finally determined for the current assessment date. THIS IS NOT CURRENT LAW!! 15
HB 1104 - 2018 • Contents to be aware of for 2019 – Other • If a political subdivision publishes or submits to Gateway a notice (e.g., Form 3) that contains an error or omission that inaccurately reflects the tax rate, tax levy, or budget actually proposed or fixed by the political subdivision by an amount that is less than 0.25%, the notice is a valid notice and the DLGF shall correct the error or omission. (See IC 5- 3-1-2.3.) • Allows the DLGF to adopt rules for the appraisal of real property at any time after a reassessment cycle begins, but will not go into effect until the next reassessment phase. THIS IS NOT CURRENT LAW!! 16
HB 1104 - 2018 Regarding the Under $20,000 Business Personal Property exemption (IC 6-1.1-3-7.2): • If a business is exempt they must state on their return the address of the personal property. • If a county chooses to implement a local service fee on the taxpayer claiming a deduction, it should only be applied in the tax district in which the majority value of the taxpayer’s personal property is located within the county. • A taxpayer may be charged only one local service fee per county. • If a penalty is imposed on a taxpayer for failing to declare on the taxpayer's tax return that the taxpayer is entitled to the exemption, the county shall include the penalty on a property tax bill associated with the tax district in which the majority value of the taxpayer's business personal property within the county is located. (See IC 6-1.1-37-7(f)) • Further guidance to follow from the AOS, DLGF, and SBOA. THIS IS NOT CURRENT LAW!! 17
HB 1104 - 2018 • Eliminates (effective retroactive to July 1, 2017) several property tax deduction and credit reapplication requirements that were added by HEA 1450-2017 concerning unmarried taxpayers who married, married taxpayers who divorced, and taxpayers who came to own their property jointly or as tenants in common with another individual. (See IC 6-1.1-12- 17.8.) • A county fiscal body may establish a salary schedule that includes greater compensation for the presiding officer or secretary of the county fiscal body or county executive taking on additional duties or attending additional meetings. THIS IS NOT CURRENT LAW!! 18
HB 1104 - 2018 • An individual elected to certain county offices must take a newly elected official training course before the individual first takes the office. • The newly elected official training course counts toward the individual's other elected official training requirements . • Money in the county elected officials training fund may be used to provide: • travel, lodging, and related expenses associated with any training paid for from the fund; and • training of one or more designees of a county elected official if sufficient funds are appropriated by the county fiscal body. • Money in this fund may be used for the newly elected official training course expenses. THIS IS NOT CURRENT LAW!! 19
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